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Chapter 04: The Marketing Environment
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1. The term Hispanic encompasses people of many different backgrounds.
a.
True
b.
False
ANSWER:
True
2. In terms of purchasing power, when income is low relative to the cost of living, people have more discretionary
income.
a.
True
b.
False
ANSWER:
False
3. Component lifestyle refers to choosing products and services that conform to traditional stereotypes.
a.
True
b.
False
ANSWER:
False
4. In today's age, a person's profession defines his or her lifestyle.
a.
True
b.
False
ANSWER:
False
5. George purchased a new hair dryer. However, the hair dryer sparked and the coil caught fire. He felt that the product
was dangerous to use. In this case, George should voice his concerns to the Federal Trade Commission.
a.
True
b.
False
ANSWER:
False
6. Global competition is decreasing with the increase in population.
a.
True
b.
False
ANSWER:
False
7. Gen Xers tend to be frugal and seek value when making purchases.
a.
True
b.
False
ANSWER:
True
8. Unlike television, social media enable firms to create conversations with customers and establish meaningful
connections.
a.
True
b.
False
ANSWER:
True
9. Gross domestic product is the total market value of all final goods and services produced during a period of time.
a.
True
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b.
False
ANSWER:
True
10. In terms of consumers' incomes, a nondegree holder will earn more than twice as much total income as a degree holder
over a lifetime.
a.
True
b.
False
ANSWER:
False
11. The Bureau of Competition provides information and holds conferences and workshops for consumers, businesses,
and policy makers on competition issues for market analysis.
a.
True
b.
False
ANSWER:
True
12. Middle-class customers are increasingly unwilling to spend their money on household staples with extra features
because of lower income.
a.
True
b.
False
ANSWER:
True
13. Teens command a negligible amount of buying power.
a.
True
b.
False
ANSWER:
False
14. In times of high inflation, businesses seeking to increase their profit margins can do so only by increasing their
efficiency.
a.
True
b.
False
ANSWER:
False
15. Asian Americans, who represent only six percent of the U.S. population, are the least influenced by technology.
a.
True
b.
False
ANSWER:
False
16. Demographics, one of the uncontrollable variables in the external environment, are significant because the basis for
any market is people.
a.
True
b.
False
ANSWER:
True
17. A target market is a group of people or organizations for which an organization designs, implements, and maintains a
marketing mix intended to meet the needs of that group, resulting in mutually satisfying exchanges.
a.
True
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b.
False
ANSWER:
True
18. Demography is one of the controllable variables in the external environment.
a.
True
b.
False
ANSWER:
False
19. The management of a firm has utmost control over the competitive environment confronting it.
a.
True
b.
False
ANSWER:
False
20. Millennials tend to be influenced more by traditional advertising, sales reps, and word-of-mouth recommendations
than through digital media.
a.
True
b.
False
ANSWER:
False
21. Nearly 60 percent of Hispanic Americans are of Cuban descent.
a.
True
b.
False
ANSWER:
True
22. Paulina is an eleven-year-old girl. She spends a lot of time on social media and likes mobile games. In this case,
Paulina is most likely to be a:
a.
baby boomer.
b.
Millennial.
c.
Gen Xer.
d.
tween.
ANSWER:
d
23. Unlike people who belong to Generation X, baby boomers:
a.
do not use social media or other technologies to buy products.
b.
tend to be influenced more by traditional advertising and word-of-mouth recommendations.
c.
spend less on gifts, personal care products, medical care, food away from home, and entertainment.
d.
graduated from college during the Great Recession.
ANSWER:
b
24. Laelle Corp., a technological firm, promotes its products through various social media platforms. Which of the
following statements is most likely to be true about Laelle Corp.?
a.
Laelle Corp. is can use the social media platforms only as a one-way communication, similar to network
television.
b.
Laelle Corp. is able to create conversations with its customers and establishes meaningful connections.
c.
Laelle Corp. has reduced its reach by promoting its products via social media platforms.
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d.
The platforms display content generated by Laelle Corp. but not its customers.
ANSWER:
b
25. James earns $3,000 per month. If his overall cost of living is $1,700, his purchasing power is _____.
a.
$3,000
b.
$500
c.
$1,300
d.
$1,700
ANSWER:
c
26. Which of the following statements is true of the attitude of teens in the United States?
a.
Most teens prefer to shop online than in stores.
b.
According to a survey taken by Piper Jaffary, teens continue to seek peer affirmation.
c.
Teens spend more on food than any other cohort group.
d.
Most teens are influenced by traditional advertising, sales reps, and word-of-mouth recommendations than any
other cohort.
ANSWER:
b
27. With access to information, opinions, and sophistication well beyond their years, _____ are directly or indirectly
responsible for sales of over $180 billion annually.
a.
baby boomers
b.
Millennials
c.
teens
d.
tweens
ANSWER:
d
28. Hispanic Americans in the United States:
a.
prefer to buy American products rather than brands from their homelands.
b.
are much older than the general U.S. population.
c.
make up the largest group to use mobile devices for any type of transaction.
d.
are the most homogenous ethnic group.
ANSWER:
c
29. In the context of social factors that affect marketing, with component lifestyles, people are:
a.
becoming nondiscriminating and undemanding.
b.
choosing products that meet their diverse needs.
c.
reducing the complexity of their buying behavior.
d.
beginning to prefer products that meet traditional needs and interests.
ANSWER:
b
30. Roberto, a Hispanic Millennial, completed his bachelor's degree in the year 2016 and is looking to pursue a successful
career. Which of the following behaviors is Roberto most likely to be associated with?
a.
Roberto favors Spanish media over English media.
b.
Roberto embraces parts of his original culture.
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c.
Roberto shares a conservative outlook towards relationships.
d.
Roberto is most likely to be a monolingual Hispanic Millennial.
ANSWER:
b
31. Fresnas Cuisine, a restaurant chain, recently introduced fast food on its menu. This action was taken because
management recognizes that their customers are predominantly young people. This scenario illustrates how _____
influence marketing decisions.
a.
economic factors
b.
demographic factors
c.
legal factors
d.
ethical factors
ANSWER:
b
32. Which of the following statements is true of the younger Millennials?
a.
They are quick to change jobs if they are unsatisfied.
b.
They graduated from college during the Great Recession.
c.
They do not spend time surfing the Web or on social media.
d.
They have difficulty finding jobs when they graduate.
ANSWER:
a
33. Jane is a 16-year-old sophomore. She stays abreast of the latest technology and educates her parents about the latest
trends in technology. She convinced them to replace her old cell phone with a new one. Given this information, Jane is a
_____.
a.
tween
b.
teen
c.
Gen Xer
d.
Gen Yer
ANSWER:
b
34. Which of the following statements is true of Gen Xers?
a.
They have acquired a disproportionate amount of spending power.
b.
They have very low spending power because of a lack of a stable source of income.
c.
They graduated from college during the Great Recession and had difficulty in finding good jobs.
d.
They are currently in two different stages of the life cycle.
ANSWER:
a
35. The CAN-SPAM Act:
a.
prohibits commercial e-mailers from using false addresses and presenting false or misleading information.
b.
requires fast-food chains to open their facilities to health inspection at least once every quarter.
c.
requires verifiable parental consent before a Web site can collect information from children.
d.
allows commercial e-mailers to charge consumers a fee to opt out of receiving further email.
ANSWER:
a
36. Which of the following statements is true of baby boomers?
a.
The youngest baby boomers were around 34 years old in 2013.
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b.
They lay emphasis on price and quality while making purchase decisions.
c.
They prefer to be addressed as senior, elderly, or aged.
d.
They are a small market with minimal spending power.
ANSWER:
b
37. Identify a true statement about the Great Recession.
a.
The economy completely recovered from the Great Recession in 2009.
b.
The Great Recession spread around the globe by 2008.
c.
The middle class was the least affected by the Great Recession.
d.
The Great Recession increased employment rates to almost ten percent.
ANSWER:
b
38. Which of the following statements is true of the incomes of baby boomers in the United States?
a.
Baby boomers accumulated little amount of savings over their working years.
b.
Baby boomers' purchasing power is discretionary and guided by their parents.
c.
Baby boomers' current incomes are relatively low because many have retired.
d.
Baby boomers' want to age in a retirement community.
ANSWER:
c
39. Unlike Hispanic Americans, most:
a.
Asian Americans are born outside the United States.
b.
Asian Americans' average family income is less.
c.
Asian Americans seldom retain their core Asian values.
d.
Asian Americans are less educated.
ANSWER:
a
40. Peter is conducting research that is aimed at formulating a combustion process that could be used in commercial
vehicles so that vehicles could run on water. Peter's research is an example of _____.
a.
experimental research
b.
applied research
c.
controlled research
d.
basic research
ANSWER:
b
41. Stephen recently purchased electronic equipment from Fournotts Corp. The equipment malfunctioned during its first
use. If Stephen lodges a complaint with the Federal Trade Commission, which of the following bureaus will be
responsible for taking action against the firm?
a.
The Bureau of Consumer Protection
b.
The Bureau of Economics
c.
The Bureau of Competition
d.
The Bureau of Consumer Privacy
ANSWER:
a
42. Equality, a value that strongly influenced the attitudes and lifestyles of Americans, emphasizes that:
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a.
success would come to anyone who got an education, worked hard, and played by the rules.
b.
every person should stand on his or her own two feet.
c.
hard work, dedication to family, and frugality were moral and right.
d.
no one should expect to be treated differently from anybody else.
ANSWER:
d
43. Jessica was born in 1994. She spends more time on Facebook than reading magazines. Despite her inclination toward
social networking sites, she continues to listen to the radio and read magazines occasionally. Given this information,
which of the following statements is true of Jessica?
a.
She does not expect brands to be on social media.
b.
She is a younger Millennial.
c.
She is one of the first generation of latchkey children.
d.
She would have graduated from college during the Great Recession.
ANSWER:
b
44. Martha visits a departmental store and discovers that a box of exotic candles will cost her ten percent more than what
she had paid six months ago. The increase in prices is the same across the country. In this scenario, which of the following
statements is true?
a.
She would have immediate purchasing power if she had a pay raise to match the inflation.
b.
She has to pay twelve percent more than what she paid last month.
c.
The departmental store is trying to earn more profits by increasing the prices of its goods.
d.
The candles' subjective value increases with the increase in inflation.
ANSWER:
a
45. Which of the following statements is true about population trends in the United States?
a.
The populations in the rural regions of the United States are aging.
b.
In many parts of the country, multigenerational households are increasingly rare.
c.
Baby boomers are now the smallest population group.
d.
Tweens are now the largest population group.
ANSWER:
a
46. Which of the following statements is true about the Great Recession of 2008–2009?
a.
Tweens were the most affected population group.
b.
Inflation rates increased to almost ten percent.
c.
It began with the collapse of inflated housing prices.
d.
It increased employment opportunities in the United States.
ANSWER:
c
47. Which of the following strategies can help business firms stimulate innovation?
a.
Hiring employees who have low risk tolerance
b.
Letting employees know that they must fear failure and should not attempt anything that might fail
c.
Instructing managers to use micromanagement techniques
d.
Using teams of writers to build scenarios of opportunities and threats
ANSWER:
d
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48. Unlike Asian Americans, African Americans:
a.
spend more time with their family and relatives.
b.
are better educated and have high income rates.
c.
spend more on groceries and hair care products.
d.
invest more on technology and electronic gadgets.
ANSWER:
c
49. Which of the following scenarios is an example of basic research?
a.
Jeremy, a social activist, is researching ways to improve the quality of life of physically challenged people.
b.
Xerome, an engineer, is trying to find an alternative fuel that would be cost effective and environmental
friendly.
c.
Sasha, a student, is working on his new science project.
d.
Laila, an engineer, is trying to rectify the malfunctions of her newly invented engine.
ANSWER:
a
50. Which of the following statements is true of a target market?
a.
Environmental scanning is performed by firms in order to prevent changes in a target market.
b.
Unlike uncontrollable variables, controllable variables do not affect a target market.
c.
Uncontrollable elements continually evolve and create changes in a target market.
d.
Managers can control the external environment that molds and reshapes a target market.
ANSWER:
c
51. Jason was born in 1970. He spent most of his childhood without much adult guidance as both his parents were
working professionals. In this case, which of the following is most likely to be true of Jason?
a.
He is independent, resilient, adaptable, cautious, and skeptical.
b.
He has a pessimistic outlook.
c.
His generation outspends other generations on consumer goods and services.
d.
He possesses a negligible amount of spending power.
ANSWER:
a
52. _____ is charged with enforcing regulations against selling and distributing adulterated, misbranded, or hazardous
food and drug products.
a.
The Association for Prohibition of Adulteration
b.
The General Food Regulations
c.
The Consumables Protection Bureau
d.
The Food and Drug Administration
ANSWER:
d
53. In the context of growing ethnic markets, African Americans in the United States:
a.
spend more on store brands as compared to the general population.
b.
comprise the largest percentage of population among different minority groups in the U.S.
c.
are inclined to spend less on groceries and hair care products as compared to other cohorts.
d.
acculturate into mainstream America forgetting their cultural heritage.
ANSWER:
a
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54. A difference between Gen Yers and baby boomers is that unlike Gen Yers, baby boomers:
a.
are currently in two different stages of the life cycle.
b.
are the most tech-savvy people yet.
c.
outspend in categories such as gifts and medical care.
d.
prioritize saving money.
ANSWER:
c
55. Which of the following can be considered demographic information of a person?
a.
Intelligence quotient level
b.
Beliefs
c.
Skill sets
d.
Age
ANSWER:
d
56. Alex purchased a battery-operated drill. Due to a manufacturing defect, the drill overheated and exploded when he
used it for the first time. Alex lodged a complaint against the firm that manufactured the drill with the Consumer Product
Safety Commission (CPSC). In this case, which of the following is most likely to happen?
a.
The CPSC can fine the offending firm up to $500,000.
b.
The CPSC will reduce the prices of the drills of the offending firm in the market.
c.
The CPSC will introduce changes to the drills of the offending firm in the market.
d.
The CPSC has no power to sentence the officers involved in the case.
ANSWER:
a
57. Which of the following statements is true of today's consumers in the United States?
a.
They emphasize on a product's price rather than its quality.
b.
They seldom give preference to brand names.
c.
They are concerned about the nutrition in their food.
d.
They tend to choose products that are expensive.
ANSWER:
c
58. Hydralicious, a juice outlet, had to stop its business as health inspectors found that the storage facilities at the outlet
did not meet the standards set by the government. In this scenario, a(n) _____ factor affected Hydralicious's business.
a.
technological
b.
economic
c.
legal
d.
demographic
ANSWER:
c
59. Which of the following core values strongly influences the attitudes and lifestyles of Americans?
a.
Structural mobility
b.
Self-sufficiency
c.
Nonconformity
d.
Self-dealing
ANSWER:
b
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60. Which of the following statements is true of the external environment with regard to developing a marketing mix?
a.
It is a standard variable that does not change.
b.
It does not give an accurate estimation of the target market.
c.
It is manually controlled to generate a marketing mix.
d.
It continually molds and reshapes the target market.
ANSWER:
d
61. Which of the following statements is true of tweens?
a.
Tweens do not spend money on themselves and are reliant on their parents and relatives.
b.
Most tweens prefer and value traditional media over social media unlike other cohorts.
c.
Tweens are influenced by sales reps and word-of-mouth recommendations.
d.
Most tweens own a mobile phone and almost half of them have smartphones.
ANSWER:
d
62. Joshua, an HR manager in a multinational firm, is recruiting employees for his firm. During the self-introduction
stage, one of the interviewees, Martha, shares information about herself. In this case, which of the following is a
demographic characteristic?
a.
She lives in Manhattan.
b.
She believes in social service.
c.
She is very creative in cooking.
d.
She prefers using electronic gadgets of a particular brand.
ANSWER:
a
63. Which of the following statements is true of Generation Y?
a.
Its members are not as hard-working and motivated as other generations.
b.
Its members have been raised from childhood to adulthood in the digital world.
c.
Its members have the least spending power than any other cohort.
d.
Its members are the first generation of latchkey children.
ANSWER:
b
64. In the context of populations, which of the following statements is true of tweens in the United States?
a.
They are the first generation of latchkey children.
b.
They are an attractive market segment for mobile games.
c.
They are a larger cohort than baby boomers.
d.
They are aged between 14 and 18 years.
ANSWER:
b
65. In the context of populations in the United States, Millennials:
a.
are now more in number than baby boomers.
b.
spend the most on food than any other cohort.
c.
have been the least affected by the Great Recession.
d.
are less interested in technology than any other group.
ANSWER:
a
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66. Which of the following statements is true of incomes in the United States?
a.
The real median household income has fallen since 2009.
b.
The median household income is the same across different states.
c.
Demographics determine a person's earning potential.
d.
A degree holder earns same wages as a nondegree holder.
ANSWER:
a
67. Which of the following statements is true of the competitive environment in the United States?
a.
Population growth in the United States decreases global competition.
b.
Technology advances can change a firm's business model.
c.
Rise of product costs makes resources readily available.
d.
A management has full control over the competitive environment.
ANSWER:
b
68. Magnira Corp., a technological firm, recently acquired a smaller firm abroad. The Federal Trade Commission looked
into the acquisition and found that Magnira Corp. used unfair means to acquire the business. In this case, which of the
following bureaus was responsible for reviewing the acquisition?
a.
The Bureau of Consumer Protection
b.
The Bureau of Economics
c.
The Bureau of Competition
d.
The Bureau of Consumer Privacy
ANSWER:
c
69. Which of the following statements is true of Hispanic Millennials?
a.
They are prone to taking a bilingual, bicultural approach to their media consumption.
b.
They do not adhere to their cultural values and are often reluctant to raise a family.
c.
Hispanic Millennials born in the United States acculturate to the primal 45-Latino society .
d.
They share the same characteristics as other societies in the United States.
ANSWER:
a
70. Unlike the youngest Gen Yers, many of the oldest members of Generation Y:
a.
are entering adulthood.
b.
were the least affected by the Great Recession.
c.
turned 50 years old in 2016.
d.
have become parents.
ANSWER:
d
71. Unlike Gen Yers, Gen Xers:
a.
were least affected by the Great Recession.
b.
have higher average incomes.
c.
spend the least on housing compared to other cohorts.
d.
are not considered as attractive market segments for family-oriented products.
ANSWER:
b
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Chapter 04: The Marketing Environment
72. Business firms can stimulate innovation by:
a.
hiring employees who have low risk tolerance.
b.
letting employees know that they have the freedom to fail.
c.
using micromanagement techniques.
d.
talking to late adopters.
ANSWER:
b
73. Which of the following legislations created the Consumer Financial Protection Bureau (CFPB)?
a.
The Restoring American Financial Stability Act
b.
The Consumer Product Safety Commission
c.
The Federal Financial Supervisory Authority
d.
The Product Quality Commission
ANSWER:
a
74. Which of the following statements is true of American teenagers?
a.
They spend about six hours per week tuned in to electronic media.
b.
They make the largest cohort group.
c.
They prefer face-to-face communication to communicating electronically.
d.
They prefer Tumblr and Instagram to Facebook.
ANSWER:
c
75. The Federal Trade Commission's Bureau of Competition _____.
a.
promotes restraint of trade among business firms
b.
encourages monopolization and agreements between competitors
c.
promotes anti-competitive strategies
d.
seeks out and challenges anti-competitive conduct in the marketplace
ANSWER:
d
76. Which of the following statements is true about the trends prevalent among the various ethnicities in ethnic markets?
a.
African Americans do not consider cultural/ethnic heritage as a critical part of their identity.
b.
Hispanics of older generations are more likely to be bilingual than Hispanic Millennials.
c.
Asian Americans retain strong core values even if they embrace American values.
d.
Asian Americans are less educated than any other minority group.
ANSWER:
c
77. Discuss ways to market to the African American market in the U.S.
ANSWER:
Answers will vary. African Americans tend to be loyal to both brands and stores; they spend 18 percent more
than the general population on store brands. They also are more likely to patronize convenience, drug stores,
and dollar stores than other groups. Relative to other cohorts, they spend more on groceries and hair care
products. Featuring nonwhite Americans has become a cornerstone of Cheerios' promotional strategy. A
recent Honey Nut Cheerios commercial features musician Usher and Buzz Bee dancing and discussing heart
health while Usher's song "She Came to Give It to You" plays in the background. Usher was chosen for the
spot because of his broad appeal—he has more than 50.5 million Facebook fans.
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Chapter 04: The Marketing Environment
ANSWER:
Answers will vary. Inflation is a measure of the decrease in the value of money, generally expressed as the
percentage reduction in value since the previous year, which is the rate of inflation. Thus, in simple terms, an
inflation rate of five percent means you will need five percent more units of money than you would have
needed last year to buy the same basket of products. If inflation is five percent, you can expect that, on
average, prices have risen by about five percent since the previous year. Of course, if pay raises are matching
the rate of inflation, then employees will be no worse off in terms of the immediate purchasing power of their
salaries.A recession is a period of economic activity characterized by negative growth. More precisely, a
recession is defined as occurring when the gross domestic product falls for two consecutive quarters. Gross
domestic product is the total market value of all final goods and services produced during a period of time.
79. Discuss the relationship between businesses and governments.
ANSWER:
Answers will vary. Business needs government regulation to protect innovators of new technology, the
interests of society in general, one business from another, and consumers. In turn, government needs business
because the marketplace generates taxes that support public efforts to educate our youth, pave our roads,
protect our shores, and the like.Every aspect of the marketing mix is subject to laws and restrictions. It is the
duty of marketing managers or their legal assistants to understand these laws and conform to them, because
failure to comply with regulations can have major consequences for a firm. Sometimes just sensing trends
and taking corrective action before a government agency acts can help avoid regulation.
80. List and explain the four core values that have strongly influenced American attitudes and lifestyles.
ANSWER:
Answers will vary. The four basic values that have strongly influenced American attitudes and lifestyles are
self-sufficiency, upward mobility, work ethic, and conformity.
• Self-sufficiency: Every person should stand on his or her own two feet.
• Upward mobility: Success would come to anyone who got an education, worked hard, and played by
the rules.
• Work ethic: Hard work, dedication to family, and frugality were moral and right.
• Conformity: No one should expect to be treated differently from anybody else.
81. List and discuss six approaches that are used by companies now to stimulate innovation.
ANSWER:
Answers will vary. The six approaches that are used by companies now to stimulate innovation are the
following:
• Building scenarios: Some firms use teams of writers to imagine detailed opportunities and threats for
their companies, partners, and collaborators in future markets.
• Enlisting the Web: A few companies have created Web sites that act as literal marketplaces of ideas
where innovators can go to look for help with scientific and business challenges.
• Talking to early adopters: Early adopters tend to be innovators themselves. They are risk takers and
look for or wish for something better to help in daily tasks at home and work.
• Using marketing research: Firms find out what customers like and dislike about their products and
competitors' products.
• Creating an innovative environment: Companies let employees know that they have the freedom to
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ANSWER:
Answers will vary. A marketing mix is the unique combination of product, place (distribution), promotion,
and price strategies. The marketing mix is, of course, under the firm's control and is designed to appeal to a
specific group of potential buyers, or a target market. A target market is a group of people or organizations
for which an organization designs, implements, and maintains a marketing mix intended to meet the needs of
that group, resulting in mutually satisfying exchanges.Managers must alter the marketing mix because of
changes in the environment in which consumers live, work, and make purchasing decisions. Also, as markets
mature, some new consumers become part of the target market; others drop out. Those who remain may have
different tastes, needs, incomes, lifestyles, and buying habits than the original target consumers.
83. Discuss competitive factors that affect a firm.
ANSWER:
Answers will vary. The competitive environment encompasses the number of competitors a firm must face,
the relative size of the competitors, and the degree of interdependence within the industry. Management has
little control over the competitive environment confronting a firm.As U.S. population growth slows, global
competition increases, costs rise, and available resources tighten, firms find that they must work harder to
maintain their profits and market share, regardless of the form of the competitive market. Sometimes
technology advances can usher in a whole new set of competitors that can change a firm's business model.
For example, one of the U.S.' most competitive companies is Amazon. The firm has more than 245 million
customers that rely on Amazon for everything from flat screen televisions to dog food. Several polls have
found Amazon to have one of the best reputations in America. Amazon's success, spurred by extremely
competitive prices, hurt Sears, JCPenney, Borders, and Best Buy, and even contributed to Circuit City's
going out of business.
84. Discuss a few strategies for marketing products to baby boomers.
ANSWER:
Answers will vary. Marketers targeting baby boomers must avoid the perception that boomers are old. Words
such as senior, elderly, and aged can quickly drive away potential customers. Boomers today are active and
feel entitled to enjoy the good life. It is best to target boomers based upon their lifestyles, purchase behaviors,
and core values, such as healthy eating, exercise, and family. Simplifying instructions for product assembly
and use makes life easier for boomers. Enlarging font size may enable boomers to avoid reaching for their
reading glasses.
