Factors that shape a market’s attractiveness are market forces, competitive environment,
and market access.
Diversification decreases the likelihood that a firm’s overall performance will be
consistent.
Heavy-up message frequency involves the use of alternating exposure periods by
spending heavily during some periods and not at all during other periods.
A defensive strategy to protect market share is the same as a hold-resources-constant
strategy.
Factors that shape a market’s attractiveness are market forces, competitive environment,
and market access.
The marketing mix strategy involves tactics with respect to the product, price,
promotion, and service.
A market-based business lays more emphasis on assets and technology than
understanding their customers.
When a business’s product has no considerable and sustainable differential advantage in
a quality-sensitive market, with many competitors, many substitutes and easy
competitor entry, conditions are favorable for a skim pricing strategy.
Life-cycle costs of ownership include acquisition cost, ownership cost, usage cost,
repair/maintenance cost and disposal cost/value.
Target market reach is the total number of customers who purchase a product as a result
of a marketing message.
The net price a business can derive from the use of indirect marketing channels is much
higher than that with other channel types.
Marketing return on sales (ROS) and marketing return on investment (ROI) are
marketing profitability ratios that allow a business to evaluate its marketing efficiency.
The intent of umbrella branding is to enhance the effectiveness of marketing programs
and to increase demand for product line extensions by transferring brand awareness and
perceptions of quality from the umbrella brand.
New product-market penetration is determined by customer and product adoption
forces.
Three key sources of customer-perceived performance include perceived product
performance, perceived service quality, and perceived company or brand reputation.
Ad copy can best attract customers when it is based on customer needs and situations
that are familiar to customers.
The only source of positive cash flow is the customer.
One disadvantage of the market share index is that it does not identify important
sources of lost market share opportunity.
High-technology markets have rapidly emerging market demand and relatively short
product and market life cycles.
VARs and OEMs operate in the consumer market but not in the business-to-business
market.
Economic profit is calculated from the ratio of net profit to the number of shares.
Three key sources of customer-perceived performance include perceived product
performance, perceived service quality, and perceived company or brand reputation.
Price elasticity is almost always a negative number due to the inverse relationship
between price and volume.
The strategic market plan of “investing to improve position” is an offensive strategic
market plan to invest marketing resources to grow the market.
Customers who make small purchases are usually profitably served with a direct
channel system.
Dividing the NMC by the investment in marketing and sales produces the marketing
return on investment.
Reverse innovation begins by identifying new product benefits.
A market-based business with a strong competitor orientation across job functions has a
lower level of market sensitivity.
A business that is able to build a higher level of customer retention can be more
profitable than another business, even when both have the same market share.
To get started, a company should adopt marketing metrics that are intuitive and
complex.
Customer awareness, interest, product trial, and customer satisfaction and
dissatisfaction, along with perceptions of relative product quality, service quality, and
customer value, all serve as forward-looking marketing metrics.
Changes in marketing metrics such as product awareness, customer satisfaction, and
customer perceptions of relative product quality and customer value generally precede
actual changes in customer purchasing behavior.
Adding the market development index and share development index to a sales forecast
provides a way to understand the potential for future sales growth.
When sales figures for one of the products of Silkskin Cosmetics, a moisturizer, began
to fall with low margins and declining volumes, the company decided to raise the price
of the moisturizer. As volumes fell further, the company continued to raise prices, thus
increasing margins, until it reached a price at which customers refused to buy the
product. This pricing strategy is known as ________ pricing.
A) harvest
B) penetration
C) low-cost leader
D) plus-one
E) skim
Calculate the gross profit generated if 2 million units are sold at a margin price of $200
per unit.
A) $200 million
B) $400 million
C) $100 million
D) $100,000
E) $400,000
Sparks Inc., a firm that manufacturers low voltage halogen lamps, currently has a 40%
share of a 1 million unit market. The firm has extensive customer knowledge, as well as
extensive competitor knowledge. The three largest competitors of Sparks Inc. have
market shares of 5%, 10%, and 15%, respectively.
Mini-Case Question. The current relative market share of Sparks Inc. is ________.
A) 166.7
B) 133.3
C) 105.5
D) 75.5
E) 60
A growth strategy to develop an untapped new market potential offers ________ and
the ________.
A) low risk; potential for high return
B) high risk; potential for high return
C) low risk; potential for low return
D) high risk; potential for low return
E) low risk; potential for increased competition
Harvest pricing is usually used in the ________ stage of the product life cycle.
A) introduction
B) growth
C) mature
D) decline
E) conception
________ purchase a variety of equipment from several manufacturers and package
them as a system.
A) Wholesalers
B) Value-added resellers
C) Brokers
D) Sales agents
E) Distributors
Crissel Food products has a margin per unit of $5.00 for a high-end brand of pasta, total
fixed expenses of $50 million, and a market demand of 400 million packs per year.
Calculate the break-even market share of the company.
A) 2.5%
B) 5%
C) 7.5%
D) 10%
E) 12.5%
What is the total sales a business should generate if it must obtain a net profit of $125
million at a sales return of 20%?
A) $1.25 billion
B) $250 million
C) $2.5 billion
D) $625 million
E) $750 million
If TRX Inc’s sales total $150 million, and the cost of goods sold is $50 million,
calculate the percent gross profit for TRX.
A) 33.3%
B) 25%
C) 66.6%
D) 15%
E) 75%
Marketing return on sales equals ________.
A) profits/sales revenues x 100%
B) gross margin/sales revenues x 100%
C) net marketing contribution/sales x 100%
D) net marketing contribution/marketing sales & expenses x 100%
E) sales revenues x % gross margin
McCann Chemicals is a multinational pharmaceutical company with headquarters in
New York. The firm invites all the research scientists at McCann Chemicals, as well as
clinicians and academicians to work on open-source projects funded by the firm.
McCann Chemicals has a special web site that is used to create an open-ended group of
prosumers, professionals, specialists, and employees, who can share information and
help each other. In this example, McCann Chemicals is using which of the following
methods?
A) reverse innovation
B) emphatic method
C) vertical integration
D) mass collaboration
E) horizontal integration
Calculate the market potential of Royston light bulbs if it has a current market demand
of 150 million bulbs at a market development index of 30.
A) 45 million
B) 4,500 million
C) 50 million
D) 500 million
E) 450 million
Which of the following marketing channels has the most potential for expanding
customer reach at the lowest cost?
A) telemarketing
B) personal selling
C) trade shows
D) catalog marketing
E) digital marketing
Dow Corning has been a market leader in silicon technology applications for over 50
years. Its products span many market applications in electronics, construction, health
care, and a multitude of industrial applications. However, as some of its product-market
applications reached the mature stage of the product life cycle, they became less
competitive. Dow Corning’s full service consultative engineering approach did not work
in more mature, price-sensitive market applications. It was also unprofitable for Dow to
pursue these customers as they represented a majority of target customers but only
represented 20% of the revenue potential for the total market for their products.
Mini-Case Question. In which of the following situations is Dow using a mixed channel
system?
A) Instead of using salespeople, Dow uses manufacturer’s representatives and brokers,
and pays them a commission on every product sold.
B) Retailers take over Dow’s sales and point-of-purchase distribution in consumer
markets, but distributors or dealers assume this responsibility in B2B markets.
C) Dow uses primarily direct mail and catalog sales to market its products, but also uses
telemarketing to target large customers.
D) Dow distributes its products directly to customers in the innovation/technology
segment but finds that use of wholesale distributors and dealers are more efficient in
reaching the service quality segment.
E) Dow uses manufacturers’ representatives, sales agents, and brokers who assume the
selling responsibility for the business and receive a commission when a sale occurs, but
do not take title to the products.
The ________ is the ratio of the market share index to the share potential index.
A) share development index (SDI)
B) market development index (MDI)
C) business share index (BSI)
D) market share index (MSI)
E) sales growth index (SGI)
Which of the following statements is true?
A) American managers are more likely than Japanese managers to drop a marketing
plan when it meets resistance.
B) The concept of continuous improvement is implicit in American marketing plan
implementation, unlike Japanese marketing plan implementation.
C) The term adaptive persistence has been used to describe the success of many
Japanese marketing plans.
D) One of Japanese management’s greatest assets is the ability to abandon a marketing
plan quickly when it is not working.
E) Japanese managers are not as determined as American managers to make their
marketing plans work.
A channel system that provides a wide range of products required in order to achieve
the desired level of customer appeal is satisfying the product performance factor of
________.
A) quality
B) assortment
C) form
D) delivery
E) after-sale service
Calculate a business’s return on sales when it makes a net profit of $500,000 from sales
of $3 million.
A) 60%
B) 16.7%
C) 30.5%
D) 50.5%
E) 24.8%
In the context of SWOT analysis, strength refers to the ________.
A) unique sources of advantage that the marketing plan should leverage
B) circumstances that limit the company’s performance and should be addressed
C) potentialities that would improve profitability and should be addressed
D) current and possible factors that could impede performance
E) aspects of the geo-political environment that strengthen the stand of the business at
present
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
Which of the following is a mode of push marketing communication?
A) sales promotions
B) direct marketing
C) media advertising
D) social media
E) channel marketing
Which of the following strategic market plans are usually growth-oriented and are more
likely to occur in the growth stage of a product-market life cycle?
A) disintermediation strategies
B) defensive strategies
C) centralization strategies
D) decentralization strategies
E) offensive strategies
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.
For which of the following products or services is the seller most likely to use life-cycle
value pricing?
A) lottery tickets
B) a hotel reservation
C) shampoo
D) a meal at a restaurant
E) a car
When pioneers set a standard that other businesses entering the market must follow in
order to compete, the standard is referred to as a ________.
A) competitive lead
B) functional lead
C) dominant design
D) functional design
E) dominant lead
Sally always purchases groceries at Dillard’s Department store. Every time she visits the
store, she spends exorbitant amounts on various items. Sally seldom recommends
Dillard’s Department store to her friends and acquaintances. The marketing manager at
Dillard’s calculates that she has a loyalty index of 50, and an average lifetime value. To
Dillard’s, Sally is a(n) ________ customer.
A) captive
B) loyal
C) unprofitable
D) repeat
E) intermediate
Calculate the advertising expense for period 16 if the sales effect for that period is $240
million.
A) $256 million
B) $224 million
C) $160 million
D) $24 million
E) $15 million
To create an overall customer satisfaction index (CSI) for a given sample of customers,
a business ________.
A) computes the average of those customers’ satisfaction ratings
B) sums all of those customers’ satisfaction ratings
C) computes the average of those customers’ satisfaction ratings and divides it by the
industry average
D) computes the sum of those customers’ satisfaction ratings and divides it by a leading
competitor’s customer satisfaction index
E) sums all of those customers’ satisfaction ratings and divides it by 100
________ provides a measure of marketing profits that demonstrates how much the
company’s investment in marketing and sales contributes to company profits.
A) Return on equity
B) Marketing ROS
C) Net marketing contribution
D) Marketing ROI
E) Sales-to-assets ratio
Which of the following is true about investing to protect position in growth markets?
A) Protecting a share leadership position in a growth market requires a much lower
investment in new products than would be required in a mature market.
B) Growing markets are inherently prone to inducing share loss.
C) The faster a market is growing, the lower the investment a company must make in
marketing resources to protect share from new and existing competitors.
D) There is a direct relationship between market share change and size of market share.
E) The effects of market growth on market share change remain the same across
industries.
When automakers include air bags, cruise control, satellite radio, and GPS systems in
their consumer products, these features are considered to be quality ________.
A) killers
B) drivers
C) enhancers
D) aesthetics
E) determinants
The last customers to adopt a new product or service are called ________.
A) early adopters
B) early majority customers
C) late majority customers
D) laggards
E) innovators