A plus-one market-based pricing strategy means a business sets its price 1% higher than
the competitors’ price.
A “concentrated frequency” strategy would be appropriate for building awareness and
comprehension for seasonal products, political candidates, and special events.
To complement a business’s internal financial performance metrics, a business needs a
parallel set of external marketing metrics to track its market-based performance.
The primary purpose of a strategic market plan is to create a set of performance
objectives and to guide the development of marketing mix strategies.
Quality aesthetics as a source of differentiation are of value only when all other aspects
of quality are met with respect to customer quality expectations.
In the context of market planning, it is advisable to view the potential market as a
homogeneous market irrespective of the different needs and demands of the smaller
niche markets.
The core offensive strategies are “invest to grow”,”improve position”, and “new market
entry”.
Push communications are directed at channel intermediaries.
The forward-looking marketing metrics signal aspects of the marketing plan that
may be failing.
Using an ownership team keeps the implementation process on track even when some
members of the team are away for extended periods because of business trips, training
programs, illness, or vacations.
A SWOT analysis is an internal assessment of assets and limitations of a company and
it excludes any external influencing factors from its purview.
The objective of offensive strategic market plans is to produce sales growth and
improve share position and future profit performance.
The forward-looking marketing metrics signal aspects of the marketing plan that
may be failing.
With an open system, marketing planners should act as facilitators in the planning
process rather than as developers of a market plan.
Target market reach is the total number of customers who purchase a product as a result
of a marketing message.
A decline in relative product and service quality means that actual product or service
quality has declined.
A SWOT analysis is an internal assessment of assets and limitations of a company and
it excludes any external influencing factors from its purview.
A portfolio analysis is an evaluation of a business, product, or market with respect to
market attractiveness and competitive position as an aid in identifying the most
appropriate strategic plan.
Companies with high brand awareness can more easily introduce new products and
enter new markets.
Major sources of competitive advantage are cost advantage, differentiation advantage,
and marketing advantage.
A broad market definition includes all potential substitute products.
Captive customers are a drain on a business’s profits because the cost of acquiring them
can never be recovered.
In general, businesses in high-share positions in growing or mature markets will use
defensive strategic market plans to maintain cash flow that supports short-run profit
performance and shareholder value.
The higher the marketing ROI, the less productive the company’s marketing and sales
strategies.
Asset turnover in an organization is an example of internal company metrics.
Followers with above-average profits tend to invest more aggressively in marketing as a
percentage of sales, as well as on a relative basis when compared with competitors with
below-average profits.
Developing a broad vision of a market is the first step in understanding market demand.
Marketing plans need to be highly formalized to be successful.
Marketing plans need to be highly formalized to be successful.
Companies with high brand awareness can more easily introduce new products and
enter new markets.
Marketing metrics are too important to be simply an add-on to the marketing or product
manager’s responsibilities.
A combination of market growth and market share growth decreases the number of
customers but increases the amount of revenue per customer.
For a segment marketing mix strategy to be successful, the strategy needs to include
only certain elements of the marketing mix.
The higher the price-earnings ratio, the greater the risk to investment.
A market-based management system views customers as lifetime partners.
A brand-encoding system helps in understanding how to position a product with a brand
name for a specific market and desired image.
In indirect channel systems, the business interfaces with customers at all contact points
and retains ownership of the product until delivery.
Which of the following segmentation strategies involves using a highly refined
marketing effort directed at an overlooked, small group of target customers?
A) a mass-market strategy
B) an adjacent-segment strategy
C) a multi-segment strategy
D) a large-segment strategy
E) a niche-segment strategy
When additional profits can be made with a slow exit from a market, a(n) ________
strategy can be a good source of short-run profits.
A) monetize
B) invest
C) divest
D) harvest
E) optimize
Calculate the frequency if a business with a 45% target market reach produces a GRP of
270.
A) 6
B) 7
C) 8
D) 9
E) 10
What are the two broad categories of market metrics?
A) process metrics and product metrics
B) forward-looking metrics and backward-looking metrics
C) marketing profitability metrics and customer metrics
D) customer metrics and competitiveness metrics
E) revenue metrics and cost metrics
Simmons Inc. is an American firm that manufactures and distributes a line luxury
furniture under the brand name Elegant Living. The firm measures the loyalty levels of
its customers and classifies them into the different groups based on their loyalty index.
Which of the following customers are most likely to be classified as spinners by
Simmons Inc.?
A) Customers who have a loyalty score between 50 to 69.
B) Customers who purchase an Elegant Living furniture one time because of an
attractive discount.
C) Customers who are first-time buyers.
D) Customers who are likely to recommend Elegant Living furniture to potential
buyers.
E) Customers who buy a lot of Elegant Living products as well as products from other
furniture brands.
Growth-oriented entrepreneurs differ from cost-focused sustainers in that
growth-oriented entrepreneurs ________.
A) are more interested in maintaining the status quo at the lowest cost
B) have a lower level of formal education at the leadership level
C) are less likely to have a working financial plan
D) are confused by value-added solutions
E) are more sophisticated in their operations
When the management team noted the increased interest in bikes as a mode of
commuting, bicycle manufacturer Sensta introduced utility bikes aimed at the urban
commuter. In which of the following cases is the company following a plus-one pricing
strategy?
A) Sensta entered the market with a bike priced at $2,500, and later, as more
competitors entered the market, reduced the price to $1,000.
B) As the market for bikes in a particular city became saturated, Sensta raised the prices
of its bikes hoping to gain maximum profit before exiting the market.
C) With several competitors with similar product features in the utility bike market,
Sensta concentrated on the sturdiness of its bikes, and raised the price of the basic
model from $500 to $1,000.
D) Sensta manufactures a basic model priced at $500, a bike with more features, priced
at $1,500 and a deluxe model priced at $3,000.
E) When Sensta entered the market, there were already competitors in the
$1,000-$2,000 price range. Sensta introduced three bike models in the $500-$700 price
range in order to capture market share, and later raised the prices of its products.
________ represents the net marketing contribution as a percentage of sales.
A) Return on equity
B) Marketing ROS
C) Gross profit
D) Marketing ROI
E) Market demand
Which of the following is an external metric for a company?
A) inventory turnover
B) net profit before tax
C) accounts receivable
D) revenue per customer
E) return on assets
The difference between the company’s performance index and its cost of purchase index
gives us the ________.
A) market share index
B) share potential index
C) customer value index
D) profitability index
E) market development index
With respect to competitive advantage, share followers with above-average profits
________.
A) have lower relative product quality
B) have lower levels of capacity utilization
C) have lower levels of price, and unit margin
D) invest less aggressively in marketing as a percentage of sales, in comparison with
competitors
E) invest more in research and development (R&D) as a percentage of sales
The three dimensions of competitive position are ________.
A) an actual position, a past position, and a target position
B) an aggressive strategy position, a passive strategy position, and a neutral strategy
position
C) a target position, a perceived position, and a real position
D) a differentiation position, a cost position, and a marketing position
E) a revenue position, a sales position, and a brand position
Customer life expectancy increases ________ with customer retention.
A) exponentially
B) linearly
C) cubically
D) parabolically
E) hyperbolically
Calculate the return on capital of a business whose net marketing contribution is $300
million and total invested capital is $900 million. The other expenses, including interest
and taxes, amount to $120 million.
A) 40%
B) 15%
C) 5%
D) 30%
E) 20%
Calculate the average percentage cost of goods sold for the top three competitors of a
business when the cost advantage index of the business is 120 and the percentage cost
of goods sold by the business is 60%.
A) 120
B) 53.22
C) 50
D) 80
E) 42
Customers with ________ customer satisfaction ratings are profitable but are below the
average customer profitability.
A) Very satisfied
B) Dissatisfied
C) Somewhat dissatisfied
D) Satisfied
E) Somewhat satisfied
Aster Inc. is an American firm that manufactures and markets cell phones for sale in
discount stores and other retail settings. The firm also sells cell phone accessories. Aster
Inc. conducted an analysis of its competitive advantage for one of its product-markets
and conducted research to learn the following information:
Mini-Case Question. If differentiation advantage and cost advantage are both rated at 40%
of total importance and marketing advantage is weighted much lower at 20%, what is Aster
Inc.’s competitive position index for this product-market?
A) 29.6
B) 18.4
C) 6.8
D) 54.8
E) 45.7
Brand equity is equal to ________.
A) total brand assets minus total brand liabilities
B) total brand assets divided by total brand liabilities
C) total company assets minus total company liabilities
D) total company assets divided by total company liabilities
E) total company liabilities minus total brand liabilities
The table given below shows four aspects of product performance that customers seek
in commercial scanners. The product performance ratings are shown for PrintWorth
Inc., an American firm that manufactures commercial scanners, and three of its
competitors.
Mini-Case Question. What is the overall relative advantage score of PrintWorth Inc. for
machine uptime?
A) 13.34
B) 7
C) 140
D) 20
E) 10
In the context of customer relationship management, every interaction with a customer
or a potential customer is a(n) ________.
A) value proposition
B) irrelevant cost
C) service contact
D) touch point
E) sales contact
If a business had a 100 percent market share, then ________.
A) it would be unable to achieve full market potential
B) it would see beyond the articulated needs of served customers
C) its sales would equal the market demand
D) its net marketing contribution would be negative
E) marketing and sales expenses would exceed gross profit
Which of the following is true of product line pricing?
A) As a business adds more products to its product line, it decreases the risk of
cannibalizing existing product sales.
B) Adding more products to a business’s product line enhances sales growth.
C) Products that have a negative cross-price elasticity are substitutes.
D) It is not necessary to know the degree to which a product has cross-price elasticity
with other products.
E) Products that have a positive cross-price elasticity are complementary products.
The net marketing contribution and marketing and sales expenses of a business are $2
million and $725,000, respectively. Calculate the margin per unit if the business
produces 100,000 units.
A) 27.2%
B) 13%
C) 31.6%
D) 8.9%
E) 22%
Which of the following is a type of marketing advantage?
A) product line advantage
B) marketing expenses
C) variable costs
D) operating expenses
E) service quality
A firm finds that 50% of the target market is exposed to a marketing communication,
40% of that group is aware of the offering, 80% understand the message. WIthin that
group, 60% intends to purchase, and 70% of that group actually does purchase. The
customer response index is 6.7%. What is the difference in the value of the customer
response index if 80% of the group intends to purchase and 60% of that group actually
does purchase?
A) 0%
B) 1%
C) 2%
D) 3%
E) 4%
The process of taking a closer look at the customer ordering process from the
customer’s viewpoint, with the objective of uncovering any potential problems or
sources of frustration in the purchasing process is called ________.
A) lead user analysis
B) the Kano method
C) conjoint analysis
D) acquisition analysis
E) “staple yourself to an order”
Which of the following is true of businesses with negative customer value?
A) They produce higher levels of pre-tax return on investment.
B) They tend to gain market share.
C) Their performance benefits exceed the cost of purchase.
D) Their value propositions are average.
E) They have great difficulty in retaining customers.
A business’s return on sales is ________.
A) sales divided by net marketing contribution
B) net marketing contribution multiplied by sales
C) net marketing contribution divided by sales
D) net profit multiplied by sales
E) net profit divided by sales multiplied by 100%
If a company’s product has an overall perceived performance score of 125, it means that
________.
A) the product has a product performance advantage of 125%
B) the company is showing a 25% increase in sales in the annual report
C) the relative cost of purchase index for the product is equal to 125
D) the business is 25 percent ahead of its competition
E) the company is showing a 25% increase in profits in the annual report
Which of the following steps in the segmentation process involves determining the
demographics, lifestyles, and usage behaviors that make one segment meaningfully
different from another?
A) segment strategy “acid test”
B) segment positioning
C) segment attractiveness
D) segment profitability
E) segment identification
Harvest pricing is usually used in the ________ stage of the product life cycle.
A) introduction
B) growth
C) mature
D) decline
E) conception
The current market demand for paper clips is 320 million and its market development
index is 55. Calculate the approximate market potential for paper clips.
A) 463 million
B) 582 million
C) 694 million
D) 720 million
E) 838 million
RVP Inc. realizes a net profit of $230 million and the owner’s equity amounts to $750
million. Calculate the return on equity for the company.
A) 16.5%
B) 30.7%
C) 7.5%
D) 75%
E) 23.2%