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This Document Contains Chapters 1 to 6 Part 1 Marketing Miscue—Concerns over Sustainability Result in Social Media Disaster for Nestlé TRUE/FALSE 1. Until it was accused by Green Peace of deforestation, Nestlé had no prior controversies surrounding its corporate ethical behavior. Answer: False Rationale: Nestlé was a vulnerable target for environmental activists because of its history of questionable practices with respect to child labor and infant formula. 2. Once accused by Greenpeace, Nestlé chose not to exercise any ethical responsibility. Answer: False Rationale: Nestlé claimed to have already made the decision to no longer do business with the palm oil supplier. 3. If Nestlé’s supply-chain and/or marketing managers had performed a SWOT analysis of its supply sources for palm oil, it could have foreseen that Greenpeace might have taken the action it did. Answer: True Rationale: A SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) of Nestlé's palm oil supply sources could have identified potential threats such as environmental activism from organizations like Greenpeace. By considering the environmental impact and public perception of their supply chain decisions, Nestlé could have anticipated the possibility of scrutiny and actions from environmental groups like Greenpeace, enabling them to proactively address issues and mitigate potential reputational and operational risks. 4. Even if the Twix commercial parody infringed on its copyright, Nestlé should have allowed it to remain because that would be doing the “right thing”—that is, it would show corporate social responsibility. Answer: False Rationale: Nestlé acted appropriately in the face of a marketing threat and it had at least tried to address the issues that Greenpeace had raised against it. MULTIPLE CHOICE 1. How could Nestlé have better anticipated its mistake with social media in triggering a more widespread boycott? A. By not responding to boycott proponents on Facebook and the like. B. By better training its Facebook monitor. C. Users of social media tend to be opinionated and so a proper response can be anticipated. D. By censoring its social media presence. E. all of the above Answer: C Rationale: Gen Yers have been encouraged by their parents, teachers, and other authority figures to share their opinions. As a result, this group feels that their opinions are needed. This is also true of the next generation. 2. Which of the following might have helped Nestlé’s Facebook monitor prevent a public relations disaster and a damaging boycott? A. seeing Facebook posters, even those against Nestlé, as stakeholders and customers B. a code of ethics to help the moderator in better interacting with Facebook posters C. a company that supports sustainable resources D. to have a prepared statement from the chief ethics officer E. all of the above Answer: B Rationale: Ethics consists of those unwritten rules we have developed for our interactions with one another. 3. The Nestlé managers who oversee the content and interaction that takes place on its Facebook, Twitter, and the like should now perform routine __________ to ensure that social media no longer poses an external threat. A. marketing analysis B. removal of controversial postings C. environmental scanning D. performance reviews of its monitors E. surveys of users Answer: C Rationale: Environmental scanning provides information about forces, threats, events, and relationships in the external environment that may affect the future of the organization or the implementation of a marketing plan. 4. The Natural Marketing Institute has identified a number of trends that are now becoming American consumer values. Since Twix’s main market is the U.S., which trend(s) should Nestlé consider in both the marketing and production of its candy bars? A. EcoTechMed B. meaningful green C. getting off the grid D. component lifestyle> E. all of the above Answer: B Rationale: The Natural Marketing Institute has identified this trend, which reveals that Nestlé’s American market is going green and would perceive Greenpeace in a positive light and be receptive to its message. 5. In purchasing palm oil for its candy bars from a non-sustainable supplier, which level in the pyramid of corporate responsibility did Nestlé neglect? A. economic responsibility B. social responsibility C. ethical responsibility D. philanthropic responsibility E. legal responsibility Answer: C Rationale: By buying from a non-sustainable supplier, Nestlé could be seen as not being ethical, doing what is right, just, and fair, and lastly, avoiding harm to the environment. 6. From a marketing standpoint organizational focus, what did Nestlé do right in doing the wrong thing—by letting the social media disaster do more damage to its reputation than selling Twix candy bars? A. Nestlé sought to earn the trust of Twix consumers by changing suppliers. B. Nestlé gave buyers the facts. C. Nestlé protected the market share of its Twix brand. D. Nestlé focused on customer value in regard to keeping Twix’s material costs low. E. all of the above Answer: E Rationale: Nestlé behaved in a way that exhibits a market orientation as well as a market-oriented strategy. Part 2 Marketing Miscue—Four Loko Targets Young College Hedonists TRUE/FALSE 1. University and governmental policymakers responded to consumer behavior rather than the legality of Four Loko. Answer: True Rationale: University and governmental policymakers often respond to consumer behavior, such as concerns about the safety and impact of products like Four Loko, rather than solely focusing on the legal aspects. Their decisions may be influenced by public health concerns, community feedback, and the perceived societal impact of such products, leading to regulatory or policy changes aimed at addressing consumer safety and welfare. 2. The founders of Phusion Projects went to college together and quickly founded their company after graduation. They did not need sophisticated market research to know their potential customers. Answer: True Rationale: The founders of Phusion Projects, Jaisen Freeman, and Chris Hunter, were college friends who identified a gap in the market for flavored alcoholic beverages aimed at young adults. They didn't rely on extensive market research but rather on their own experiences and observations of college life to understand their potential customers' needs and preferences. This intimate knowledge allowed them to quickly establish their company and develop products like Four Loko, which became popular among their target demographic. 3. There is no such thing as “bad press.” The banning of Four Loko increased its sales. Answer: False Rationale: This is only true in the sense that it made for black market sales and publicity for whatever Phusion Projects did next after it withdrew its sports drink, reformulated it, and marketed it without its original ingredients. 4. When Phusion Projects defended its product and compared it to mixing rum and Coke, it was actually repositioning Four Loko. Answer: True Rationale: Phusion Projects defended Four Loko by comparing it to mixing rum and Coke, emphasizing that its product was simply a more convenient and standardized way to enjoy a similar experience. This strategy helped reposition Four Loko as a familiar and socially acceptable choice, despite initial controversies over its high alcohol content and caffeine combination. MULTIPLE CHOICE 1. What consumer value does the Four Loko address that is in the American tradition of such products as the Egg McMuffin and the breakfast bar? A. portability B. no waiting C. convenience D. surprise E. colorful packaging Answer: C Rationale: Four Loko—unfortunately—allows for customers to buy a drink that premixes alcohol and caffeine.. 2. Which of the following factors or influences provided a “gateway” to drinking and abusing Four Loko? A. sport hydrating drinks consumed in childhood B. social class C. income D. college drinking subculture E. all of the above Answer: E Rationale: The target market, college students, grew up with energy drinks on store shelves. Phusion Projects further design Four Loko to exploit middle-class lifestyle and income of the market’s youth as well as the daredevil subculture of using energy drinks and alcohol at the same time. 3. It was the __________, that psychological factor in particular, which made Loko Four seem healthy, even good for you. A. convenience B. perception C. eye candy cans D. hierarchical need of thirst E. motivation Answer: B Rationale: Four Loko relies on perception in the vivid, shocking colors encoded of cans that encode athleticism, sex appeal, the forbidden (the perception of doing an illegal drug), and like subculture values. 4. Four Loko is obviously a product that relies on peer pressure and self-image. Does this product depend on non-aspirational groups in influencing its consumers? Choose the best answer. A. No, Four Loko is entirely dependent on its athletic, herbal lifestyle image. B. Yes, drinking Four Loko separates its largely male athlete consumers from female college students. C. Yes, Four Loko uses legal wormwood extract and thus disassociates the product from drug addicts. D. Yes, groups perceived as unhealthy or social pariahs, such as drunken beer drinkers and hard core alcoholics. E. No, Four Loko relies more on the consumer achieving the ideal, athletic drinker self-image. Answer: D Rationale: Non-aspirational reference groups, or dissociative groups, influence our behavior when we try to maintain distance from them. 5. Phusion Products used __________ to make Four Loko attractive to young people mixing and abusing such energy–alcoholic drink combinations such as Red Bull and Jägermeister. A. perceptual mapping B. positioning C. product differentiation D. cannibalization E. niche marketing Answer: B Rationale: Since Jägermeister and Red Bull are competing for the same consumer in this relationship, then positioning is the best answer here. 6. In the end, Phusion Products had to remove caffeine and other stimulants that masked Four Loko’s inebriating effects. New variations of the product will be an alcoholic beverage. This is an example of __________. A. repositioning B. cannibalization and repositioning C. cannibalization D. an FDA ruling E. a change of product class Answer: A Rationale: The new products, although not the same formulation, would be a reorientation of the brand for drinkers of fruit-flavored alcoholic drinks, such as wine coolers and the like. Part 3 Marketing Miscue—McAfee Virus Protection Update Crashes Computers Worldwide TRUE/FALSE 1. For home users, McAfee’s antivirus program would be called a specialty product. Answer: True Rationale: McAfee's antivirus program would be considered a specialty product because it serves a specific niche market of users who need protection against computer viruses and malware. 2. McAfee’s problem was exacerbated because it was a global brand. Answer: True Rationale: McAfee's global presence meant that any issues or problems, such as software glitches or customer dissatisfaction, could quickly escalate and affect its reputation on a global scale, thereby exacerbating its problems. 3. Antivirus software is a membership service. Answer: True Rationale: Antivirus software often operates on a subscription or membership basis, where users pay periodically (e.g., annually) to receive ongoing updates and protection against new threats. 4. Although relatively few customers experienced the blue screen of death that afflicts a stricken Windows computer, the real harm done was to McAfee’s brand equity. Answer: True Rationale: While the blue screen of death (BSOD) issue affected relatively few customers directly, the broader impact was on McAfee's brand equity. Such incidents can erode consumer trust and confidence in the brand's reliability and effectiveness, potentially leading to long-term negative consequences. MULTIPLE CHOICE 1. Perhaps more than any other product or service, antivirus software is subject to the following—almost on a daily basis. A. quality assurance B. planned obsolescence C. product modification D. functional modification E. perishability Answer: C Rationale: Quality modification is necessary to ensure and change a product’s dependability and durability. 2. McAfee has antivirus products designed for its consumer and enterprise segments. However, the corrupted data and quality assurance problem affected all market segments. Which of the following seems a likely reason? A. standardized components B. research & development C. Windows XP D. package uniformity E. mass customization Answer: A Rationale: In this case, the standardized components would be lines of code and the problem McAfee caused its customers is due to how product lines allow a firm to use standardized components to reduce costs. 3. The McAfee antivirus program illustrates what aspect of the classic definition of a product? A. A product need not be delivered in a package. B. A product includes both its favorable and unfavorable characteristics. C. A product is an item in a product line. D. A product consists of the equity it produces. E. A product is anything that satisfies an individual’s personal wants. Answer: B Rationale: A product may be defined as everything, both favorable and unfavorable, that a person receives in an exchange. 4. The remedies that McAfee took to placate subscribers impacted by its failure in quality control were intended to __________. A. reposition its virus program as reliable B. improve an existing product C. investing in brand loyalty D. ultimately protect its brand equity E. address each gap in the gap model Answer: E Rationale: The gap model provides a number of scenarios that can be problematic when management underestimates the expectations of its customers. 5. The 36-hour delay in responding to the defective security upload on the part of McAfee’s executive vice president is __________. A. the gap between the service that customers receive and the service they want B. doing “whatever it takes” to stay in business C. an external communication gap D. the inability of management and employees to do what needs to be done E. all of the above Answer: C Rationale: Even if the McAfee VP needed time to assess what had caused the botched upload, the clients clearly perceived that a more immediate response was needed. 6. What kind of protection best describes McAfee’s response to those customers inconvenienced by its software update? A. express warranty B. implied warranty C. free repairs of computers D. subscription extensions E. limited warranty Answer: B Rationale: Given the way McAfee addressed problems on a case-by-case and did not challenge computer users, the company abided by an implied guarantee and did what was necessary to make its customers whole. Part 4 Marketing Miscue—Microsoft Implies Distribution of Angry Birds on Windows Phone 7 TRUE/FALSE 1. Rovio Mobile, in its ongoing negotiations with Microsoft described in the case, was being courted by the software giant to sell Angry Birds to the users of its Windows Phone 7 platform. Answer: False Rationale: The producer, Rovio, would not be conducting its own transactions with phone users. Microsoft would handle these. So neither would be a direct seller. 2. None of the classic marketing discrepancies apply to the marketing channels for a downloadable product such as Angry Birds. Answer: True Rationale: Marketing discrepancies such as discrepancies between planned and actual performance, discrepancies among customers' expectations, and discrepancies over time, place, or possession do not typically apply to downloadable products like Angry Birds. Since downloadable products are digitally distributed and accessible online, they often bypass many traditional distribution challenges and can be instantly accessed by customers globally without significant logistical or physical constraints. Therefore, classic marketing discrepancies related to physical distribution channels are largely irrelevant in this context. 3. At this writing, you cannot download Angry Birds for your BlackBerry phone. As yet Angry Birds can’t achieve the kind of economies of scale it could producing the app. Answer: False Rationale: Since BlackBerry cannot sell Angry Birds, it just means it cannot be part of its market channel. However, it can compete with its knockoff, Angry Farm. 4. Online sales of apps should always be seen as a direct channel to consumers. Answer: False Rationale: Online sales is often, indeed more often, done through middlemen. In this case, the middleman was Microsoft in a retailer channel. MULTIPLE CHOICE 1. What Microsoft “jumped the gun” on in making it possible for users of its Windows Phone 7 to play Angry Birds can best be described as __________. A. intellectual theft, at least temporarily B. an intermediary C. a reseller D. a wholesale distributor E. a franchisee Answer: B Rationale: In the marketing channel for apps, Microsoft, like the Apple’s App Store, would play the role of an intermediary in the transaction. 2. Just like a company that manufacturers the smartphones on which users can play Angry Birds, Rovio Mobile benefits from the principle of __________ in distributing its product via Microsoft, the App Store, and Android Market? A. economies of scale B. intermediaries C. contact efficiency D. overcoming discrepancies E. all of the above Answer: C Rationale: The contact efficiency of having these online stores means that the producer, Rovio, is free from the costs of making its own transactions with end users. 3. Which of the following channel functions applies in the download delivery of Angry Birds? A. logistics B. facilitating C. promoting D. assorting E. all of the above Answer: E Rationale: Microsoft, in its premature advertisement of Angry Birds, was promoting the product. It also facilitates it in the information it gathers about who downloads the game, it performs the assorting function, too, and Windows Phone 7 servers and phones provide the logistics for getting the game to the consumer. 4. Because the Angry Birds app is sold through __________ you will probably never see it sold __________. A. wholesale distributors/directly to consumers B. virtual distributors/in a box C. virtual distribution/in spinoff forms for non-phone platforms D. retail channels/as a standalone product E. app stores alone/Game Stopper and the like Answer: C Rationale: The Internet as well as cell phone networks has enabled virtual distributors to sell products that will never require conventional packaging. Spinoffs do exist, however, which are not apps. And these are being sold too as downloads as gaming systems have access to the Web. 5. Given that Angry Birds is available for iPhones, Microsoft, and Android phones, it is fair to say it enjoys __________. A. multiple distribution B. economies of scale in regard to marketing channels C. high-profile placement D. a price monopoly E. market segmentation Answer: B Rationale: These three giants allow for marketing channels that can attain economies of scale (i.e., specialization and division of labor) by marketing the app to end users. 6. Which of the following nonstore outlets would best describe Microsoft’s mode of selling Angry Birds? A. automatic vending B. online retailing C. online vending machine D. direct retailing E. none of the above since an app store is a store Answer: B Rationale: Purchasing an app on a smartphone is analogous to purchasing it on PC via the Web. Part 5 Marketing Miscue—Yellow Tail’s Tails-for-Tails Campaign TRUE/FALSE 1. There was a disconnect between the benefit of Yellow Tail product—wine—and its animal welfare initiative, Tails for Tails. Answer: True Rationale: There was a disconnect between the primary product benefit of Yellow Tail wine and its animal welfare initiative, Tails for Tails, which aimed to support animal shelters. This mismatch may have confused consumers about the brand's core message and values. 2. Seen from the context of the communication process, a YouTube video of a rancher shooting bottles of Yellow Tail is also noise. Answer: True Rationale: In the context of the communication process, a YouTube video of a rancher shooting bottles of Yellow Tail could be considered noise. Noise refers to any interference that distorts or interrupts the clarity of a message between sender and receiver. Such a video could create confusion or negative associations with the brand, potentially distracting from its intended communication efforts. 3. Yellow Tail lacked an integrated market communication message. Answer: False Rationale: Actually, it had an effectively integrated message between its public relations goals, advertising, and so on. This is why it generated the quick and negative response it did in the U.S. meat industry. 4. Tails for Tails would be appropriate had Yellow Tail produced a line of organic, sulfite-free vegan-friendly wines and specifically advertised its support of HSUS in friendlier venues such as vegetarian and vegan magazines and the like. Answer: False Rationale: In public relations campaigns, there is usually no direct control over message audiences and Tail for Tails would have eventually generated the same negative response. MULTIPLE CHOICE 1. Associating Yellow Tail with HSUS on endcap signage in stores is a(n) __________ promotion. A. environmental B. Tails for Tails C. anti-meat D. social media E. sales Answer: E Rationale: Store endcaps and like displays are sales promotions. 2. In Yellow Tails’ promotional mix, the Tails for Tails campaign is which of the following? A. advertising B. sales promotion C. publicity D. public relations E. all of the above Answer: D Rationale: The Tails for Tails campaign was originally intended to show that Yellow Tail cared for animals and thus win over new customers who would, by their wine purchases, also contribute to a good cause. 3. The $100,000 donation “did not engender the strong support and affinity among American consumers.” It did not get any support from American agricultural groups representing the meat and dairy industry. What does this suggest about a global company like Yellow Tail? A. It should have hired a lobby group first. B. Its home market lacked the kinds of controversy the U.S. market had. C. HSUS had successfully deceived the Australians. D. It did not understand the politics or culture of its chief export market. E. all of the above Answer: D Rationale: Although b is a good guess, the best answer is d. The United States has some of the most powerful agricultural interests in the world given the feedback it gave Yellow Tail. Also, American consumers, the target market, might be “going green” but have not embraced plant-based diets en masse. So doubling down with HSUS was not an option. 4. Yellow Tail finally perform some crisis management and withdraw its sponsorship from HSUS. This suggests the winemaker does not engage in __________. A. advocacy advertising B. due diligence C. institutional advocacy D. environmentalism E. animal rights Answer: A Rationale: Advocacy advertising is a form of advertising in which an organization expresses its views on controversial issues or responds to media attacks. 5. Why would it have been difficult or even impossible for Yellow Tail to leverage its support of HSUS? A. The winemaker lacked a complementary product for vegetarians and vegans. B. HSUS did not soften its tone. C. HSUS has no real animal shelter or rescue program. D. The winemaker wants to portray itself as friendly to animals without controversy. E. all of the above Answer: E Rationale: Yellow Tail is a total mismatch given the aims and methods of HSUS, an incompatible “worthy” cause in this case. 6. What went wrong with the Tails-for-Tails campaign shows the power of __________ in undoing the good will that a company wants associated with its brands. A. Facebook B. social media C. Twitter D. a plant-based diet E. all of the above Answer: B Rationale: Several social media outlets spread negative commentary about Yellow Tail’s support of HSUS, not just one. Part 6 Marketing Miscue—Concerns over Sustainability Result in Social Media Disaster for Nestlé TRUE/FALSE 1. 6pm.com customers essentially shoplifted online by taking advantage of an honest mistake. Answer: False Rationale: There was no price tag switching here! However, it is human nature to perceive the retailer as having unlimited resources. To the consumer, the price is the cost of something and not the many factors it is to the retailer. 2. The idea that “it’s too good to be true” did not stop people from buying. Consumers will always choose the lowest price. Answer: False Rationale: The information effect of price was surely overridden by savvy customers who for the most part took a chance—like a lottery ticket—on seeing what benefit came from the mistake. 3. Amazon.com did not want to set the public relations precedent set by Tony Hsieh. Answer: False. Rationale: Amazon.com did not set the public relations precedent set by Tony Hsieh. Hsieh's approach to public relations was largely based on his personal philosophy and strategies for building company culture and customer relations at Zappos, rather than being an example set by Amazon.com. 4. Retailers contribute to the “door-buster” and “entitlement” behavior of customers when pricing mistakes are made. Answer: True Rationale: Retailers contribute to "door-buster" and "entitlement" behavior among customers when pricing mistakes occur because such events can lead to customers expecting deep discounts or special deals, even if they are based on errors. When retailers honor these mistakes, it reinforces customer behavior that seeks to capitalize on such situations, potentially encouraging entitlement among consumers expecting similar concessions in the future. This cycle can impact both customer expectations and retailer profitability if not managed carefully. MULTIPLE CHOICE 1. In many marketing textbooks, including this one, there is the principle that if a retailer sets the price too low, it will frustrate sales based on __________. The write-off of $1.6 million in merchandise proves otherwise given the context. A. customer satisfaction B. consumer law C. the price-is-right notion D. perceived reasonable value E. none of the above Answer: D Rationale: In this case, the idea of “reasonable price” meaning “perceived reasonable value” is trumped by the human nature. 2. If one were to pick an explanation from economics for why 6pm.com customers took advantage of the programming error that priced every piece of merchandise at $49.95, it was to __________. A. avoid the sacrifice effect of price B. experience the pleasure of “cheating back” a large corporation C. see if the company would eat the loss D. join a class action suit E. all of the above Answer: A Rationale: The sacrifice effect of price—what the consumer has to give up for a good or service—would be the purely economic reason for taking advantage of the $49.95 one-price-fits-all mistake. 3. What would be the retailing principle that compelled Tony Hsieh to ship merchandise that was grotesquely underpriced when he could have just cancelled the orders? A. every online sale is a legal sale, a contract between consumer and retailer B. customer satisfaction C. it would have cost more to settle in court D. the dollar amount lost is only retail, not wholesale E. the loss would be made up in future sales Answer: B Rationale: Answer e is close—but maintaining customer satisfaction is indispensable for retailers. In this case, it would be those customers who ordered items at $49.95 and those who know that 6pm.com will even lose money to satisfy customers. 4. What really pays for the losses absorbed by 6pm.com? A. Amazon.com B. Amazon shareholders C. 6pm.com D. 6pm.com vendors E. none of the above Answer: E Rationale: Ultimately, future profits made from future 6pm.com customers pay for the lost income—indeed, they were already paying for it before it happened since all companies factor in some kind of shrinkage costs (“expenses not otherwise accounted for”) into the markup. 5. By rewarding consumers who took advantage of the pricing mistake, what factor of human behavior did Tony Hsieh encourage about the shopping experience at 6pm.com? What made a mistake a promotion? A. feelings of entitlement B. the hedonistic effect C. a sense of fair play D. the allocative effect E. all of the above Answer: B Rationale: 6pm.com is designed to be a fun shopping experience. So, Hsieh actually used the accidentally low purchase prices of the merchandise into a hedonistic consumption event that intensifies 6pm.com’s reputation as a fun place to shop, to reward yourself. 6. Choose the most plausible reason that marketing manager might rationalize giving away $1.6 million in merchandise? A. Ultimately, long-term profit goals had to be considered, not a short-term loss. B. It is still the right thing to do and no point second guessing Tony Hsieh. C. The company seeks only a satisfactory profit motive. D. People need a break from the recession. E. So consumers did not feel like they were paying a penalty. Answer: A Rationale: The $1.6 million can be seen as one of those trade-offs that managers must weigh to achieve profit maximization. It is that important notion of careful management after a mistake or setback. Test Bank for MKTG Charles W. Lamb, Jr. Hair, Joseph F., Carl McDaniel 9781285091860

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