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
Clarion Inc. is a firm that produces components for the manufacturing equipment
market and currently enjoys a 42% market share. Through an analysis of the share
development path, the marketing department of the firm estimates that the firm should
perform at a 95% level in product awareness, 85% in product preference, 80% in
intentions to purchase, 90% in product availability, and 75% in rate of purchase.
Mini-Case Question. Clarion Inc. has focused its product-market strategies on large
manufacturers, that have sales exceeding $100 million per year and that purchase
large-scale, multi-million dollar equipment. However, research conducted by the
marketing department identifies a fairly attractive market potential for Clarion
manufacturing equipment among smaller manufacturers. Clarion Inc. produces a line of
lower capacity manufacturing equipments, with a pricing strategy aimed at catering to
the needs of the small manufacturers. In this example, Clarion Inc. uses a ________
strategy.
A) improve customer loyalty and retention
B) develop a new market
C) enter new-market segments
D) harvest for cash flow
E) divest for cash flow
TDZ Manufacturing wants to change its distribution system from an indirect channel to
a direct channel system. Which of the following should the company use to achieve
this?
A) cash-and-carry wholesalers
B) retailers
C) full-function wholesalers
D) traveling sales representatives
E) dealers
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
A business with a competitive price and a large value advantage is most likely to
________.
A) lower its price to create a comparable value on the basis of positioning
B) choose not to compete in this segment of the market
C) improve performance on the basis of customer price-performance preferences to
create customer value
D) charge more for its product and still offer a good value
E) lower its price, as its price is high relative to the value it offers
Which of the following strategic market plans is more likely to occur in the latter stages
of a product-market life cycle and is often designed to protect important share positions
and be a large contributor to short-run sales revenues and profits?
A) disintermediation strategies
B) defensive strategies
C) offensive strategies
D) centralization strategies
E) decentralization strategies
Which of the following is true regarding an oblique strategy?
A) It is based on extensive competitor knowledge but little or no customer knowledge.
B) It leverages a knowledge advantage with respect to customers and competitors.
C) It involves making a direct attack on a competitor’s position.
D) It is an overreaction to competitor moves due to limited customer knowledge.
E) It is an overreaction to customer demands due to limited customer knowledge.
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 forward-looking indicator of business success?
A) customer satisfaction
B) shareholder dividends
C) sales
D) market share
E) ROI
McEwan and Co., a commercial real estate brokerage firm, creates four storyboards,
each of which delineates a different value proposition and segment positioning strategy.
The firm recruits a group of executives from different industries, and assigns them to
one of the four segments. The executives are asked to critique each segment’s
storyboard and select the one that most appeals to them. The firm aims to assess its
understanding of segment needs and its ability to translate that understanding into a
value proposition. In this example, which of the following methods is McEwan and Co.
using?
A) the emphatic method
B) segment attractiveness test
C) marketing mix strategy test
D) mass-market strategy test
E) segment strategy “acid test”
Calculate a company’s market share if the company’s relative market share is 60 and the
market shares of its three largest competitors are 14%, 8%, and 16%.
A) 40.6%
B) 20%
C) 46%
D) 22.8%
E) 60%
Which of the following would be considered as a current performance variable under
the situation analysis level of a marketing plan?
A) channels to the market
B) communications strategy
C) performance gap
D) competition and industry
E) break-even sales figures
If there are 20 manufacturers and 500 retailers, and 15 transactions are made per year at
a cost of $200 per transaction, calculate the total number of transactions.
A) 150,000 transactions per year
B) 200,000 transactions per year
C) 250,000 transactions per year
D) 300,000 transactions per year
E) 350,000 transactions per year
In ________ pricing, the price is set on the basis of the value that customers realize
when they compare the price and benefits of the company’s product with those of a key
competitor’s product.
A) life-cycle value
B) customerization
C) perceived-value
D) value-in-use
E) cost-based
Which of the following statements is true about market metrics?
A) They involve using uniform benchmarks across all industries.
B) They provide qualitative data, and not quantitative data.
C) They always express the measurements as pie charts.
D) They measure market conditions and a business’s performance in that market.
E) They are more advanced product-market metrics for companies that are dealing with
pricing issues.
A scope effect refers to ________.
A) lowering the per-unit manufacturing cost of a product by increasing the volume of
production
B) improving the efficiency by learning new methods of management and production
C) lowering the average unit cost of all products through extension of the product line
D) increasing revenue by increasing the scope of marketing initiatives
E) lowering the marketing costs through increasing the advertising cost efficiency of a
brand extension strategy
Maurice has determined that along the share-development path, his business should
perform at a 90% level of product awareness, 80% in product preference, 50% in
intentions to purchase, 80% in product availability, and 70% in rate of purchase. What
is the approximate share potential index for Maurice’s business?
A) 20%
B) 37%
C) 45%
D) 50%
E) 74%
A recent Consumer Reports study analyzed consumer ovens and found that the average
performance rating for all ovens tested was 70 with an average price of $110.
QuickBake oven, a consumer oven, has a relative performance of 130 based on a
weighted average of product performance, service quality, and brand reputation. It has a
relative cost of purchase of 90. What is the perceived customer value of QuickBake
oven?
A) 60
B) 77.7
C) 40
D) 130
E) 120
Which of the following terms refers to the number of customers who have entered a
market at a certain point in time?
A) current market potential
B) market penetration
C) maximum market entry
D) market potential index
E) rate of entry
What is the relation between the customer retention (CR) and average customer life
(N)?
A) CR=1/N
B) CR=1+(1/N)
C) CR=N/2
D) CR=(N-1)/2
E) CR= 1-(1/N)
Smith Automotive is a company that produces component parts for automobile engines.
A margin of $4 per unit produces fixed expenses of $80 million. The market demand for
the component parts is 400 million units per year.
Mini-Case Question. Determine the required volume if the company’s operating income
is $20 million.
A) 10 million units
B) 20 million units
C) 25 million units
D) 30 million units
E) 35 million units
Which type of marketing channel typically yields the highest margins for a
manufacturer?
A) direct channel
B) indirect channel
C) mixed channel
D) intermediate channel
E) distributor channel
When differences in customer needs are small or demographics are not distinctive, a
business may elect to use a ________ strategy.
A) small-segment
B) vertical integration
C) horizontal integration
D) mass-market
E) niche-segment
Which of the following is an external backward-looking metric for a company?
A) intent to repurchase
B) customer awareness
C) perceived performance
D) customer satisfaction
E) customer retention
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.
A valuable planning matrix that will reveal opportunities of growth can be created by
combining the ________.
A) market development index with the share development index
B) market share index with the share potential index
C) market share index with the share development index
D) current market demand with the market potential
E) current market demand with the market development index
Customers can create a set of preference curve, by examining how customers make
trade-offs when choosing among various combinations of price and benefits, using
________.
A) conjoint analysis
B) regression analysis
C) an empathic design
D) a focus group
E) the relative performance index
A company’s fixed marketing administrative expense was estimated to be $12 million. It
has retained 245,000 customers and has acquired 36,000 new customers. The
acquisition cost per customer is 10 times more than the retention cost per customer. If
the retention cost per customer is $180, calculate the marketing and sales budget of the
company.
A) $236.6 million
B) $338.4 million
C) $183.9 million
D) $120.9 million
E) $85.8 million
Which of the following is used to determine a segment’s marketing profitability?
A) customer retention index
B) net profit (after taxes)
C) gross profit
D) net marketing contribution
E) gross revenue
Unilever has over 10 personal care brands, each with a unique focus and product
positioning strategy. Buyers would not know that Unilever is the manufacturer of a
specific brand unless they looked closely at the small print on the package. This is an
example of using a ________ branding strategy.
A) company name only
B) brand name only
C) company and brand name
D) brand and subbrand name
E) company, brand, and product name
Kindest Inc. generates a net profit of $345.1 million from 17 million shares. Calculate
the earnings per share of the company.
A) $20,300 per share
B) $2,030 per share
C) $203 per share
D) $2.3 per share
E) $20.3 per share
Which type of marketing channel typically yields the highest margins for a
manufacturer?
A) direct channel
B) indirect channel
C) mixed channel
D) intermediate channel
E) distributor channel
Bruce has determined that along the share-development path, his business should
perform at a 70% level of product awareness, 80% in product preference, 60% in
intentions to purchase, 90% in product availability, and 80% in rate of purchase. His
business’s share development index is 25. What is the business’s approximate market
share index?
A) 6%
B) 20%
C) 32%
D) 45%
E) 64%
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