In the context of brand name development, which of the following is true about an
invented name?
A) It is built from root words and morphemes.
B) It aims to evoke a positive attribute or a feeling.
C) It is associated with an experience.
D) It is based on the names of company founders.
E) It strives to build an association between the brand name and the core function of the
brand.
A ________ is a long-term strategy with a 3- to 5-year time horizon and specific
performance objectives.
A) tactical marketing plan
B) workhorse plan
C) marketing mix strategy
D) vertical integration strategy
E) strategic market plan
________ index a business or product against another similar business or product with
respect to product performance, service quality, and brand image.
A) Competitiveness metrics
B) Finance-based performance metrics
C) Market share metrics
D) Internal performance metrics
E) Customer metrics
The actual variable cost per customer and variable cost per customer estimated in the
plan are $3 and $8, respectively. The actual volume and the volume estimated in the
plan are 30,000 units and 20,000 units, respectively. Calculate the cost variance.
A) $250,000
B) $100,000
C) -$100,000
D) -$150,000
E) $150,000
What is the marketing return on sales (marketing ROS) for a product line that generates
$40 million in sales revenues with a net marketing contribution of $32 million ?
A) 75%
B) 80%
C) 100%
D) 125%
E) 150%
Which of the following statements is true with regard to a marketing plan?
A) A marketing plan must focus on the larger market without breaking it down into its
constituent markets.
B) A marketing plan can lose focus by looking at niche markets to promote the
business.
C) A marketing plan must be highly formalized to be successful in the real scenario.
D) A good marketing plan will avoid profiling target customers.
E) A marketing plan can help a company clearly position itself in a variety of market
segments.
Captive customers differ from unprofitable customers in that captive customers
________.
A) are the result of mismanaged customer selection
B) are simply “big spenders”
C) are a drain on a business’s profits because the cost of acquiring them can never be
recovered
D) have a low desire to repurchase but are unable to move easily to another company’s
product
E) produce a referral value that is over three times their customer lifetime value
If the price per unit is $34 and the variable cost per customer is $17, calculate the
margin per unit.
A) $2
B) $51
C) $25.5
D) $8.5
E) $17
Which of the following is true for businesses with above average customer value?
A) They need to spend more to acquire customers.
B) The cost of purchase equals performance benefits.
C) They produce higher levels of pre-tax return on investment.
D) The cost of purchase exceeds performance benefits.
E) They have great difficulty in retaining customers.
Office Services Inc. uses a direct sales force to sell office equipment to its 1,000 target
customers. The required rate of customer contact for sales effectiveness and customer
satisfaction is two customer visits per month, translating into 24,000 customer contacts
per year. Assuming that a salesperson can make three customer visits per day, has 4
days per week to make customer calls, and works 50 weeks per year, how many
salespeople does Office Services Inc. need to meet its requirements?
A) 4
B) 40
C) 480
D) 2,000
E) 2,400
A business has a market demand of 300,000 units at a market share of 20%. The price
per unit and variable cost per customer are $25 and $10, respectively. If the net
marketing contribution of the business is $450,000, calculate the total marketing and
sales expenses incurred by the business.
A) $250,000
B) $160,000
C) $520,000
D) $300,000
E) $450,000
Which of the following is a differentiation and product positioning strategy?
A) low cost of purchase
B) brand encoding
C) product elimination
D) bundling and unbundling
E) product line extensions
The break-even volume for a company is ________.
A) operating income minus fixed expenses
B) operating income plus fixed expenses divided by margin per unit
C) fixed plus variable expenses minus sales
D) fixed expenses divided by margin per unit
E) company sales divided by industry sales
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. Aster Inc. identifies that the market attractiveness index for the cell
phone market is equal to 25. The firm decides to adopt a strategy of minimizing
investment in its business, and striving for maximum cash flow from its market position.
Aster Inc. aims to manage prices and marketing resources in a way that maximizes its cash
flow without exiting the market. Aster Inc. is considering on using which of the following
strategic market plans?
A) an invest to grow strategy
B) a monetize strategy
C) an optimize position strategy
D) a harvest strategy
E) a disintermediation strategy
Karen is interested in assessing a market segment’s attractiveness by analyzing the
market demand. Which of the following would be a variable should she assess?
A) number of companies
B) ease of entry
C) customer familiarity with her company
D) market size
E) access to channels that reach target customers
A business has 75 million shares and its net marketing contribution is $550 million. The
other expenses, including interest and taxes, amount to $280 million. Calculate the
earnings per share for the business.
A) $2.4 per share
B) $6 per share
C) $1.2 per share
D) $3.6 per share
E) $4.8 per share
Variance in volume reflects any difference in actual versus planned market demand plus
any difference in actual versus planned ________.
A) customer satisfaction
B) market share
C) selling price
D) profit margin
E) marketing expense
AVB Inc. is a business that produces automobile parts. The plan and the actual
performance of the business are shown in the table.
Mini-Case Question. Calculate the volume variance of the business.
A) -$72,000
B) $72,000
C) $80,000
D) -$80,000
E) $64,000
FunTime Inc., is an American toy manufacturing firm, with its headquarters in New
York. The firm specializes in manufacturing educational toys for children. The table
given below shows the educational toys market segment performance for FunTime Inc.
Mini-Case Question. What is the marketing ROS for FunTime Inc.?
A) 27.5%
B) 50%
C) 10%
D) 15%
E) 52%
Which of the following statements is true of marketing channels?
A) A direct marketing channel removes a business from the end-user customer.
B) A direct marketing channel offers higher margins than an indirect channel, but the
company must bear the cost of marketing expenses.
C) Customers who make small purchases are usually profitably served with a direct
channel system.
D) An indirect marketing channel is often expensive, so it limits the number of
customers a business can profitably reach.
E) Original equipment manufacturers (OEMs) are part of a direct marketing channel
system.
Which of the following statements is true about trade promotions?
A) They involve offering price reductions to end-users.
B) They aim to build awareness, attraction, and loyalty in end-user.
C) They are a part of pull communications strategy.
D) They are customer-directed sales promotions.
E) They stimulate intermediaries to engage in aggressive customer promotion efforts.
Jack is examining his company’s financial performance measures. Which of the
following would be on the list?
A) net marketing contribution
B) market ROI
C) relative service quality
D) customer satisfaction
E) return on sales
An oblique strategy differs from a reactive strategy in that an oblique strategy
________.
A) requires minimal customer knowledge
B) requires minimal competitor knowledge
C) involves making a direct attack on a competitor’s position
D) refers to making competitive moves from an internal perspective with no real market
knowledge
E) seeks to gain a competitive advantage without direct confrontation
Within the dimensions of product performance, which of the following is a “quality
driver”?
A) conformance
B) durability
C) serviceability
D) reputation
E) reliability
Which of the following is true regarding customer buying power?
A) When customer buying power is high, the cost of serving customers decreases.
B) When customer buying power is high, the market attractiveness increases.
C) When customers can easily switch from one supplier to another, the competition
decreases.
D) When the purchased product or service is of limited importance to the customer,
supplier dependence is much higher.
E) When customer buying power is high, they force increased competition.
In which stage of the product life cycle are maximum marketing profits attained?
A) introduction
B) early growth
C) late growth
D) late decline
E) early decline
A captive customer is most likely to ________.
A) have a low purchase amount
B) recommend a brand or company to others
C) have a weak product preference
D) have a high customer loyalty index
E) have a high desire to repurchase
Calculate the total sales of a product if the market demand for the product now in the
early growth stage of the product life cycle is 2 million units annually, and the product
captures 15 percent of this demand with a price of $50 per unit.
A) $100 million
B) $15 million
C) $30 million
D) $50 million
E) $75 million
Which of the following communications are primarily intended to stimulate potential
customers to contact the company, visit the company web site, obtain a free sample, and
buy the company’s product?
A) brand-action communications
B) brand-image communications
C) brand-information communications
D) brand-development communications
E) brand-awareness communications
Which of the following is a characteristic of cost-focused sustainers?
A) They have a high level of formal education at the leadership level.
B) They look for new ways to invest and grow their business.
C) They have a very high revenue per customer.
D) They are willing to buy value-added solutions.
E) They have a limited or no financial plan.
Office Services Inc. uses a direct sales force to sell office equipment to its 1,000 target
customers. The required rate of customer contact for sales effectiveness and customer
satisfaction is two customer visits per month, translating into 24,000 customer contacts
per year. Assuming that a salesperson can make three customer visits per day, has 4
days per week to make customer calls, and works 50 weeks per year, how many
salespeople does Office Services Inc. need to meet its requirements?
A) 4
B) 40
C) 480
D) 2,000
E) 2,400
Calculate the gross rating points of an ad if it has a target market reach of 70 percent
and a frequency of 5.
A) 14
B) 70
C) 75
D) 250
E) 350
Which of the following groups of customers are most likely to have high desire to
repurchase, strong product preference, long customer history, and a very high referral
value?
A) Loyal customers
B) Captive customers
C) Unprofitable customers
D) Repeat customers
E) Customer terrorists
Which of the following is a component of customer loyalty index?
A) customer satisfaction
B) average customer life
C) customer’s income level
D) desire to repurchase
E) customer’s demographic details